The Superior Court of Pennsylvania recently denied an ex-wife’s request for half of the down payment received as part of a land installment contract because it held that such a contract does not constitute a sale.
As reported in Pennsylvania Law Weekly, the case, Bernhardt v. Dieffenbach, involved divorced spouses whose separation agreement required them to split equally the equity in their marital home in the event of a sale or termination of tenancy. At the trial level, the ex-wife sought a declaratory judgment that she was entitled to half of a down payment received pursuant to an installment land contract the couple received for the sale of their marital home.
The trial court held that the ex-wife was not entitled to half of the down payment because of an oral agreement between the former spouses that modified the separation agreement, whereby the ex-wife exchanged her claim to half the down payment for all of the property’s subsurface rights.
The Superior Court affirmed, but for a different reason. The court held that it was unnecessary to determine whether an oral agreement existed, because the ex-wife did not have a claim to half of the down payment in the first place.
The court explained that while an installment contract is a “conditional sales contract for the sale of real property,” the initial down payment was not a sale. A sale is defined as “the transfer of ownership in property or title for a price.” Because the down payment did not transfer ownership, it was not a sale. It followed that because the separation agreement required them to split the home’s equity only in the event of a sale or a termination of tenancy, the agreement did not require them to split the down payment. The ex-wife therefore had no claim to half of the down payment, and she could not bargain this nonexistent claim away for something else.
The court also noted that while the ex-wife sought a declaratory judgment, the separation agreement could not be interpreted under Pennsylvania’s Declaratory Judgment Act. This was because the act cannot apply where the court must reform (change) a contract before it can be interpreted. The court therefore analyzed the dispute pursuant to contract and property law, not in equity as the trial court had done.
This case illustrates the legal nuances that arise in divorce matters, especially those involving division of marital property. Our family law attorneys are available to help you navigate these tricky issues to help you get through the divorce process as effortlessly as possible.